Save or invest ?

nrehtuos

Hi all, I’ve just been made redundant. It’s not all bad news though, I was lucky enough to find a similar job almost immediately. I’m looking for some advice on what’s the best thing to do with my redundancy money ? I have no idea what to do ! Should I put it in a savings account, or maybe an ISA, I was even thinking of investing it in property by putting a decent deposit down and renting it out. Any help or your opinions will be very helpful. Thanks Mick.

MX5huggy

How much is it? 

Pay off any expensive debt (probably not your mortgage). Put 6 moths salary in Premium Bonds as an emergency fund. Put any extra you want to spend in the next 2 years in Premium Bonds/ cash savings. 

Are you under 40?

Put the rest in a pension to grow without having to run a property business. 

nrehtuos

Hi MX5huggy, thanks for the advice, I got a little over £30k for 17years service. I looked at paying a loan off we have but there’s only 9months left aand the settlement figure was not worth taking up. What are the benefits of premium bonds ? Also can I put a lump sum into a pension ? 

Thanks Mick.

MX5huggy

Premium Bonds are basically currently the best place for easy access savings if you have about £10k  plus for 6 months or more you should average winnings of 0.9% which is better than savings accounts currently unless it’s a regular saver or for a small amounts linked to a current account. 

You can open a SIPP and pay lump sums in the maximum in any year is the smaller of 100% of your annual salary or £40k. Not sure if redundancy payments are considered salary. 

jimjames

The options you've mentioned vary widely in risk from guaranteed (savings) to very high risk (property). There are many options in between as mentioned like pensions but also S&S ISAs that can be far more flexible than owning a rental property. The ISA can take up to £20k per year so would cover a decent chunk of your money. 
However you mention a loan so do you have any emergency funds as that would be a priority to ensure you have sufficient money if something similar happened again and you don't get redundancy.

Albermarle

OP - Take a step back and tell us what your current situation is . 
Home owner /Mortgage ?
Any current savings and investments ?
Any pension provision ?
How old are you? married ? children ?